wadirum1
5 years ago
Here's what I thought was meant by rounds 1, 2, and 3:
Round 1: 25 percent tariffs on $50 billion worth of Chinese technology goods including machinery, semiconductors, autos, aircraft parts and intermediate electronics components imposed Summer 2018 as part of “Section 301” probe into China’s intellectual property practices
Round 2: 10 percent tariffs on $200 billion worth of Chinese goods including chemicals, building materials, furniture and some consumer electronics, imposed on Sept. 24, 2018, as a response to Chinese retaliation.
Round 3: Increase of the 10 percent Round 2 tariffs to 25 percent (done on May 10).
Round 4: Threatened application of 25 percent tariffs to all remaining Chinese exports to US. (Not yet done, and now less likely to occur.)
So, when the CEO was speaking in June 2019, I was thinking he had included the increase from 10 to 25 percent on the selected goods in what I've labelled Round 3.
Here's an article that uses the term "tranche" in the same way I (and I believe CEO Chesnut) have used "round": https://www.hugheshubbard.com/news/section-301-tariffs-increase-to-25-for-tranche-3-goods-from-china. Or, here are the tariffs by "list": https://ustr.gov/issue-areas/enforcement/section-301-investigations/search
Here's a NYTimes story on how one apparel company was bracing for what I've labelled as Round 4 (having dodged major impacts of rounds 1-3): https://www.nytimes.com/2019/06/05/business/media/tariffs-retail-clothes-everlane.html
Finally, I did some searching of the tariff lists. For instance, cotton bedding, not embroidered, not napped is on List 4 (which is the one that was just tabled).
petermic
18 years ago
So, what do the financials look like? This week CRWS released their 10Q for the quarter ended June 30, prior to the debt refinancing.
First, company has nearly $30 million in book value, about $3 per share.
Total shareholders' equity 29,753 28,842
Note however that they also show goodwill of $22 million.
Earnings wise, they reported $2.1 million of operating income on $16.2 million of sales. Net income was $0.9 million, or $.10 eps. That looks like about a 7.5x PE on an annualized basis, now that the added dilution is no longer there.
July 2, July 3,
2006 2005
Net sales $ 16,164 $ 13,659
Cost of products sold 11,584 10,692
Gross profit 4,580 2,967
Marketing and administrative 2,450 2,468
Income from operations 2,130 499
Other income (expense):
Interest expense (723 ) (802 )
Other -- net 119 42
Income before income taxes 1,526 (261 )
Income tax expense 615 8
Net income (loss) $ 911 $ (269 )
Basic income (loss) per share $ 0.10 $ (0.03 )
Diluted income (loss) per share $ 0.04 $ (0.03 )
Weighted average shares outstanding -- basic 9,506 9,506
Weighted average shares outstanding -- diluted 22,137 9,506
petermic
18 years ago
So here's what happened:
CRWS has 9.5 milion shares outstanding. Until a month ago they had some old debt that had warrants associated with it to buy 22 million shares of common stock. That old debt went away, along with the warrants.
Because operations had improved since that old financing, the company was able to garner much better terms on their refinancing.
In summary, prior to the debt refinancing, the company showed 35mm shares outstanding. Subsequent to, only 10 million. EPS triples.
July 10, 2006 (1) July 11, 2006 (2)
----------------- -----------------
Outstanding Common Shares 9,505,937 9,505,937
Common Shares Issuable upon
Exercise of Warrants 22,345,536 -
Shares Issuable to Management
upon Exercise of Warrants 3,550,000 -
Stock Options Outstanding 536,100 536,100
---------- -----------
35,937,573 (3) 10,042,037
petermic
18 years ago
Crown Crafts, Inc. Announces Debt Refinancing and Extinguishment of Lender Warrants and Certain Contingently Issuable Shares
Tuesday July 11, 5:35 pm ET
GONZALES, La., July 11, 2006 (PRIMEZONE) -- Crown Crafts, Inc. (``Crown Crafts'' or the ``Company'') (OTC BB:CRWS.OB - News) today announced that it has completed a successful refinancing of its corporate credit facilities. The new financing package, secured through CIT Group/Commercial Services, Inc., substantially reduces the Company's total debt and its cost of funds and, importantly, extinguishes all of the warrants that were exercisable by its lenders and certain shares that were issuable to management upon the exercise of such warrants, which together represented more than 70 percent of the Company's equity.
``We are very pleased to announce this refinancing as part of what has been an incredible turnaround since 2001. Crown Crafts continues to make meaningful progress toward creating long-term value for its stockholders, and this new facility provides a key financial building block in that process,'' said E. Randall Chestnut, Chairman, President and CEO. ``This transaction returns a significant portion of the Company's equity to our stockholders and clearly demonstrates Crown Crafts is again ready to grow based on its proven strengths in infant products. We've posted a solid track record of profitability for five consecutive years. All of these successes were achieved while aggressively paying down the Company's debt and making significant changes in our operations required by an evolving marketplace.''
With today's announcement, Crown Crafts will have 9.5 million shares issued, 500,000 shares issuable upon the exercise of stock options and $12.6 million in debt. Immediately subsequent to the July 2001 restructuring, the Company had approximately 36 million shares issued or issuable and $48 million in debt. See the tables below for the Company's capital and debt structure immediately before and after the refinancing.
The CIT facility allows the Company to borrow up to $22 million on a three-year revolving line of credit secured by accounts receivable, inventory and fixed assets at a favorable interest rate of 1% below prime. The $16 million debt which was retired with this new loan had an effective rate of 11.65%. In connection with the refinancing, non-interest bearing subordinated indebtedness was reduced from $8 million to $4 million, payable in two non-interest bearing installments of $2 million each in July 2010 and July 2011. The $8 million debt was carried on the Company's books net of an unamortized discount of $1 million immediately before the refinancing. The new $4 million debt will initially be recorded net of an original issue discount of $1.1 million. The Company expects to record an approximate pre-tax gain of $4.0 million on the subordinated debt reduction. After the refinancing, current debt under the new agreement will be approximately $12.6 million compared to $23.9 million at the end of fiscal 2006.
Below are two tables showing the capital and debt structure of the Company immediately before and after the refinancing.
Issued and Issuable Shares Immediately Before
and After the Refinancing
July 10, 2006 (1) July 11, 2006 (2)
----------------- -----------------
Outstanding Common Shares 9,505,937 9,505,937
Common Shares Issuable upon
Exercise of Warrants 22,345,536 -
Shares Issuable to Management
upon Exercise of Warrants 3,550,000 -
Stock Options Outstanding 536,100 536,100
---------- -----------
35,937,573 (3) 10,042,037
========== ============
Debt Outstanding Immediately Before and After the Refinancing
July 10, 2006 (1) July 11, 2006 (2)
------------------- --------------------
Loan Type Outstanding Effective Outstanding Effective
Balance Interest Balance (4) Interest
Rate Rate
Revolver $ - Prime 9,700,000 Prime
plus 1% less 1%
Interest Bearing
Subordinated Debt 16,000,000 11.65% - N/A
Non-interest Bearing
Subordinated Debt 8,000,000 0.00% 4,000,000 0.00%
Original Issue
Discount (970,699) N/A (1,076,392) N/A
PIK Notes (5) 1,330,267 0.00% - N/A
---------- ----------
Total $ 24,359,568 $ 12,623,608
=========== ============
(1) Immediately before refinancing.
(2) Immediately after refinancing.
(3) In calculating diluted earnings per share for financial reporting
purposes, the Company historically assumed that the proceeds from
the exercise of all outstanding warrants and options would be
used to repurchase shares on the open market. Accordingly,
rather than reporting 35.9 million fully diluted shares, the
Company reported 21.7 million fully diluted shares at the end
of fiscal 2006 for financial reporting purposes.
(4) Internally generated cash of $7.8 million was used to pay down
a portion of the retired debt.
(5) Includes $253,000 accrued interest to be converted to long-term
debt.
``We are very pleased with the CIT financing package and the tremendous progress we have made in the past five years,'' said Chestnut. ``With this refinancing of our debt, we have achieved several important benefits for our stockholders. We have reduced our overall debt by more than 70 percent since our restructuring in 2001, substantially reduced our interest expense going forward and right-sized the capital structure of the Company. The overhang of the warrants has been a primary concern of our stockholders and investors. This transaction not only allows us to eliminate the overhang, but to do so on extremely favorable terms that provide maximum benefit to our stockholders.''
Chestnut continued, ``Following last month's announcement of a 57% increase in pre-tax net income, this event further transforms our Company and is a clear confirmation by the lending community of our renewed financial strength. Since 2001, we have stabilized our business, have adjusted to significant changes in production, sourcing, importing and direct-to-retail supplying and have actually improved profitability both as a percentage of revenues and in absolute terms. We have achieved these remarkable results through a clear and dedicated focus on our core business, a disciplined approach to execution, and efficient management of all parts of our operations. Crown Crafts is today a lean, efficient and responsive business able to meet the demands and needs of our customers. We believe that we are now poised to grow and expand our business, and we look forward with excitement to the opportunities we are now positioned to embrace.''
The Company will host a teleconference on Thursday, July 13, 2006 at 10:00 a.m. Central Daylight Time to discuss the refinancing and answer appropriate questions from stockholders. Interested investors may join the teleconference by dialing (866) 269-9608. Please refer to confirmation number 835994. The teleconference can also be accessed in listen-only mode by visiting the Company's website at http://www.crowncrafts.com. The financial information to be discussed during the teleconference may be found prior to the call on the investor relations portion of the Company's website.
A telephone replay of the teleconference will be available from 11:45 p.m. Central Daylight Time on July 13, 2006 through 11:59 p.m. Central Daylight Time on July 20, 2006. To access the replay, dial (800) 475-6701 in the United States or (320) 365-3844 from international locations. The access code for the replay is 835994.
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